Report – VW to set up a planning center in Brazil

According to people familiar with the proceedings, Volkswagen AG is planning to revive sales in the largest South American nation – Brazil – by setting up a planning center.

The fourth-biggest car market in the world – Brazil – has been experiencing a drop in car sales in recent years, after it was considered among the most dynamic emerging economies. The German automaker is now battling dwindling demand as it’s also weighed down by an aging model line-up. The Group’s deliveries were down 13% last year and in the first six months of 2014 they further slumped 18% to 271,700 cars.

Two people that have knowledge of the carmaker’s plans talked to Reuters and said – although declining to be identified discussing private matters – that the automaker is now planning to establish a development and planning center in Brazil. It would allow the company to cater more effectively to the consumer needs in Latin America’s largest auto market. VW AG would move to invest 3.6 billion euros ($4.85 billion) to introduce new models, build new manufacturing facilities and add new technologies in Brazil throughout 2018.

The strategy to boost sales in Brazil is part of the larger growth plan envisioned by the world’s second-biggest automaker to reverse a slumping demand in both South and North America in the coming years.